The US panel wrote: “The Council is exploring how these funds, based on their structure or the nature of their redemption management practices, may raise distinct liquidity and redemption risks, particularly during periods of market stress.”

Regulators and market participants globally have raised concerns that post-crisis banking regulations have reduced dealer inventories, making it harder for bond funds to exit positions in times of market stress.

Andrew Bailey, the chief executive of the UK Prudential Regulation Authority — the Bank of England’s unit which oversees banks and insurers — said in a speech last week that the Bank is mooting a plan to require funds to hold larger liquidity buffers and change fund redemption terms to factor in market liquidity conditions.

The SEC in December outlined a series of measures it is considering to reduce risk in the fund management industry, including stress testing funds.

Speaking at a fund industry conference hosted by The Investment Company Institute in DC this month, chairman Mary Jo White said the SEC is considering whether it needs to update definitions of liquidity, illiquidity and derivatives. She added: “What we are looking at is whether at the fund level there need to be enhancements to the risk management regime.”

The concern over the growth of bond mutual funds and ETFs was one of several areas that the FSOC said member agencies are reviewing, including a shift in leveraged lending outside of the banking system, volatility products and digital currencies.

Related

The FSOC is amid a review of products and activities in the asset management industry, which started last July. At that time the body shifted away from an initial approach that could have resulted in labelling firms or specific funds as systemically important financial institutions.

In the annual report published this week, the FSOC wrote: “The Council has not made any determination regarding the existence or nature of any potential risks to US financial stability arising from asset management products or activities; in the event the Council’s analysis identifies risks to US financial stability, the Council will consider potential responses.”